Grocers are boosting their spending on newspaper freestanding inserts (FSIs), according to new research by St. Louis-based Tactician Media, LLC a provider of web-based products for the planning and placement of print media.

According to the company, during the first two quarters of 2015, grocers in the Tactician Media Business Intelligence Transaction Database increased their spending on FSIs by 7 percent over the same period of last year. The changes come from a larger mix of grocers utilizing newspapers to deliver their message to consumers and the growth in the number of frequency and volume of the major grocers.

Growth in the grocery vertical was driven by increases from Winn Dixie, Publix, Supervalu, Kroger, Cub Foods, Aldi among others, many of which had double digit spending increases for the first half of 2015 compared to 2014. FSI spending by Albertsons, Ingles, Tops, Raley’s and others was lower to a smaller extent. In addition, spending by single market independent grocers increased as their use of newspaper FSIs was over 27 percent higher year over year. Some of the increase came from a heavier focus on “print and deliver” programs sold by local newspapers. These higher CPM programs provide smaller grocers with the ability to compete side by side with larger national retailers in targeted distribution areas, said Tactician Media.

Pharmacy retailer FSI advertising expenditure was up 2 percent in 2015 as compared to the first six months of 2014. Rite Aid and CVS drove the majority of increases in both revenue and volume while Walgreens was down slightly on the revenue side even though their quantity distributed had a lower decrease from 2014.

Select specialty general merchandise retailers pulled back in their use of FSI advertising in the first half of 2015. The Sports Authority, Toys R Us, Jo Ann Fabrics and Ulta were down substantially. However, increases from Pep Boys, Shoe Carnival, Hancock Fabrics and Michaels helped offset some losses. Overall the FSI advertising expenditure in the specialty retail vertical was down 9 percent year over year for the first two quarters.

Overall use of inserts by restaurants is less that 2 percent of total newspaper FSI advertising revenue but has the opportunity for huge growth for the industry, according to Tactician Media. Advertising by franchise groups such as Carl’s Jr Hardees, Denny’s, Dunkin, Papa Murphy’s, Subway and Arby’s increased as these brands continue to push for additional market share. These quick service restaurants are a large user of single sheet coupons and flyers.

FSI spending from home improvement retailers was down in 2015 from 2014, with revenues from FSI advertising down 10 percent from last year. Most of the declines came from “big box” retailers such as Home Depot and Lowes. However, many of the independent home improvement retailers were up substantially. True Value, Harbor Freight Tools and Northern Tool Equipment were up double digits in FSI advertising expenditures. Also driving this home improvement vertical was the continued growth of window and door retailers. Champion Windows, for example, led this group with major FSI advertising expenditure increases nationwide.

CPG Ads Up, Too
Newspapers also saw growth with a number of consumer package goods (CPG) and healthcare providers. Preprint advertising is often placed by brokers or directly by the advertisers themselves to drive merchandise revenue into grocers and large discounters. These Third Party advertisers comprised around 8 percent of all FSI newspaper advertising revenue in 2015. The Third Party vertical has also seen increases by non-CPG companies such as healthcare providers, insurance and banking. FSIs can provide a very effective cost savings over direct mail, a traditional advertising vehicle for these types of companies, said Tactician. While Procter and Gamble pulled back their use of FSIs in the first half of 2015, Colgate Palmolive, United Healthcare, Unilever and Geico had substantial increases for the first half in 2015 compared to the same period in 2014. The conversion of postal related spending to newspaper distribution networks has been a continuing trend in the industry.

Overall, spending on newspaper FSIs was down about 7 percent, while the distributed volume was down only 4 percent for the first half of 2015 compared to 2014. Some national retailers have struggled with increasing same store sales. Select retailers have retracted their print programs by cutting the number of pages and overall distribution volume. Newspapers are also feeling the effects of rate pressure from agencies and large national placement firms. These rate declines present a significant challenge for publishers as the rate decline has a much larger impact on revenue for the same or slightly less distributed volume.

The Tactician Media Business Intelligence Database contains over $1.3 billion of newspaper FSI transactions of over 300,000 across 535 publications in the US. Included are transactions from 2013 through June 2015 totaling over 32 billions inserts placed into consumers’ households. Tactician Media provides web-based products for the planning and placement of print media.